Correlation Between US Physical and Talanx AG

Can any of the company-specific risk be diversified away by investing in both US Physical and Talanx AG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining US Physical and Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US Physical Therapy and Talanx AG, you can compare the effects of market volatilities on US Physical and Talanx AG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in US Physical with a short position of Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physical and Talanx AG.

Diversification Opportunities for US Physical and Talanx AG

-0.89

Correlation Coefficient

US Physical  Talanx AG

Pay attention - limited upside

The 3 months correlation between UPH and Talanx is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and US Physical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on US Physical Therapy are associated (or correlated) with Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of US Physical i.e., US Physical and Talanx AG go up and down completely randomly.

Pair Corralation between US Physical and Talanx AG

Assuming the 90 days horizon US Physical Therapy is expected to under-perform the Talanx AG. In addition to that, US Physical is 1.27 times more volatile than Talanx AG. It trades about -0.2 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.24 per unit of volatility. If you would invest  7,905  in Talanx AG on December 20, 2024 and sell it today you would earn a total of  1,660  from holding Talanx AG or generate 21.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

US Physical Therapy  vs.  Talanx AG

US Physical Therapy

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Physical Therapy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Talanx AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Physical and Talanx AG

The main advantage of trading using opposite US Physical and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical position performs unexpectedly, Talanx AG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Talanx AG will offset losses from the drop in Talanx AG's long position.

The idea behind US Physical Therapy and Talanx AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.